NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE

 
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
Natural Gas Use
in the Canadian
Transportation
Sector

Deployment Roadmap

PrePared by the
Natural Gas use
iN traNsportatioN
rouNdtable

december 2010
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
Disclaimer
This Roadmap provides the perspective of numerous stakeholders and was prepared under the direction of
the Roundtable members. The contents, conclusions, and recommendations are not necessarily endorsed by all
participating organizations and their employees or by the Government of Canada.

© Natural Gas Use in Transportation Roundtable.

For more information or to receive additional copies
of this publication, write to:

Canadian Natural Gas Vehicle Alliance
350 Sparks Street, Suite 809
Ottawa, ON K1R 7S8
Telephone: (613) 564-0181
Email: info@cngva.org
www.cngva.org

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NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
Foreword by the Deputy Minister
The Natural Gas Use in the Canadian Transportation Sector Deployment
Roadmap initiative, launched in March 2010, brought together stakeholders from
governments, industry — including gas producers, transporters, distributors,
vehicle and equipment manufacturers, and end-users — as well as representatives
from environmental non-governmental organizations and academia. Facilitated
by Natural Resources Canada, this process provided a platform for this broad
array of stakeholders to discuss the potential for natural gas use across the
medium- and heavy-duty transportation sector, explore strategies for overcoming
barriers associated with its use, and develop recommendations for deployment.

As this work was conducted, key stakeholders worked together in an unprecedented
manner and pace. Consensus-building played an essential role during the develop-
ment of the Roadmap’s analyses and in the formulation of its recommendations.

This Roadmap focused on expanding the use of natural gas across the transporta-
tion sector and represents an important contribution to deliberations toward a
broader strategy to reducing greenhouse gas (GHG) emissions. Other efforts in
the transportation sector include, for example, a suite of regulations to address
GHG emissions from vehicles and minimum requirements for renewable content
in fuels. Continued dialogue among governments and market participants will
be important to ensure that all opportunities are properly assessed to inform
decision-making.

I would like to take this opportunity to thank all of those involved in this process
for their dedication in contributing to the delivery of the Roadmap.

Serge P. Dupont, Deputy Minister

                                                         FOREWORD                 iii
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
Roadmap participants
Alberta Ministry of Energy

Auto21

British Columbia Ministry of Energy, Mines and Petroleum Resources

Canadian Association of Petroleum Producers

Canadian Gas Association

Canadian Natural Gas Vehicle Alliance

Canadian Trucking Alliance

Canadian Urban Transit Association

Climate Change Central

Daimler

Dynetek Industries

Encana Corporation

Gaz Métro

IMW Industries

Ministère des Ressources naturelles et de la Faune du Québec

Natural Resources Canada

Pembina Institute

Pollution Probe

Terasen Gas

TransCanada Pipelines

Westport Innovations Inc.

iv            NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
Glossary
Biogas: Methane produced from the decomposition of biomass in landfills, digest-
ers, and wastewater plants.

Biomethane: Biogas that is upgraded to pipeline quality-standard and can be used
interchangeably with fossil natural gas.

Compressed natural gas (CNG): One possible form in which natural gas can be
used in vehicles. CNG is formed by compressing gas to high pressures in the range
of 3,000 to 3,600 pounds per square inch (psi). Compression reduces the volume by
a factor of 300 (or more) compared with gas at normal temperature and pressure.
It is stored in steel or fibre-wound cylinders at high pressures (3,000 to 3,600 psi).
Onboard a natural gas vehicle, the gas travels through a pressure regulator and
into a spark-ignited or compression ignition engine.

End-user: The person or organization that is the actual user of a product.

Fuel Value Index (FVI): A measure that allows all costs associated with natural gas
use to be consolidated and reflected as a cost-per-diesel-litre equivalent, as used
in the business modelling. For those vehicle applications with FVI values greater
than 1, the value proposition for natural gas is equivalent to or better than that for
a comparable diesel fleet.

Heavy-duty vehicle: Class 7–8 vehicles with a gross vehicle weight of 15 tonnes
or greater.

Internal Rate of Return (IRR): The rate of return used to measure and compare the
profitability of investments — in other words, the level of payback that an investor
can expect to receive over the life of the asset.

Lifecycle greenhouse gas (GHG) emissions: The total amount of GHG emissions
created throughout the full fuel lifecycle, including stages of fuel and feedstock
production, distribution, delivery, and use.

Light-duty vehicle: Class 1–2 vehicles with a gross vehicle weight of up to 4.5 tonnes.

Liquefied natural gas (LNG): One possible form in which natural gas can be used
in vehicles. LNG is made by cooling the gas temperature to -162°C. The liquefaction
process reduces the volume by a factor of 600 compared with gas at normal tem-
perature and pressure. The LNG is stored on vehicles in a double-walled stainless
steel tank and vaporized before injection into the engine.

Medium-duty vehicle: Class 3–6 vehicles with a gross vehicle weight between
4.5 and 14.9 tonnes.

Natural gas vehicle (NGV): An alternative fuel vehicle that uses CNG or LNG as
a clean alternative to conventional liquid fuels.

Original Equipment Manufacturer (OEM): The company that originally manufac-
tures the products.

Shale gas: Natural gas that is trapped in fine-grained sedimentary rock that can be
accessed through advanced drilling techniques including horizontal drilling and
multi-stage fracturing.

                                                        G l O s s a R y              v
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
vi
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
table of Contents
iii   Foreword by the Deputy Minister

iv    Roadmap participants

v     Glossary

ix    Executive summary

1     baCKGROuND
1     Chapter 1: Introduction
3     Chapter 2: Drivers of Interest and Market Opportunities
7     Chapter 3: The State of Natural Gas Use in Transportation

13    aNalysis
13    Chapter 4: Natural Gas Fundamentals
19    Chapter 5: Business Case Modelling
27    Chapter 6: End-User Needs
31    Chapter 7: Education and Outreach
35    Chapter 8: Technology Research and Development Needs

39    DEplOyMENt
39    Chapter 9: Market Transformation
45    Chapter 10: Recommendations
49    Chapter 11: Next Steps

51    appENDiCEs
51    Appendix A: Results of the Scoping Analysis
53    Appendix B: NGV Cross-Jurisdictional Analysis

                                     tablE OF CONtENts            vii
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
viii   N at u R a l G a s u s E i N t h E C a N a D i a N t R a N s p O Rtat i O N s E C tO R
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
Executive summary
the Context                                                                        technologies and fuels such as natural gas. For medium-
Canada’s transportation sector is characterized                                    and heavy-duty vehicles that operate in return-to-
by high energy use and significant greenhouse gas                                  base and corridor fleets, natural gas offers some
(GHG) emissions. In 2007, transportation accounted                                 important potential benefits, such as the ability to:
for 29 percent of secondary energy use, making it                                  „„Diversify energy use in the transportation
Canada’s second-largest sector in terms of energy                                     sector and meet increasing energy demand;
consumption.1 Unlike most other sectors of the                                     „„Reduce carbon emissions from the
Canadian economy, though, transportation relies on a                                  transportation sector;
single energy source (crude oil-based fuels) to meet the                           „„Introduce into a new market a cost-effective fuel
vast majority of its energy needs. Energy demand for                                  that has historically traded at a discount to crude
transportation is increasing, and vehicle energy use is                               oil-based fuels on an energy equivalent basis; and
projected to increase by 31 percent between 2004 and                               „„Provide an alternative compliance option as
2020.2 GHG emissions from transportation sources                                      carbon-related regulations enter the
are also rising. More than one-third of the increase in                               transportation sector.
Canada’s GHG emissions between 1990 and 2008 was
attributable to transportation sources.3 To address the                            Despite these potential benefits, market adoption for
transportation sector’s increasing energy demand and                               medium- and heavy-duty natural gas vehicles (NGVs)
GHG emissions, a comprehensive strategy is needed                                  in Canada has been very limited to date. There are
to improve vehicle efficiency, increase the use of                                 significant challenges associated with NGV deploy-
lower-carbon fuels, and enhance system efficiencies.                               ment in Canada, including operating risks associated
The increased use of natural gas in the transportation                             with costs and technology performance, high upfront
sector is one component of the overall solution.                                   vehicle costs, a lack of widespread infrastructure,
                                                                                   and non-economic issues, including scarce recent
Canada’s natural gas supplies have grown substan-                                  experience with NGVs, insufficient information about
tially in recent years due to the advent of new drilling                           current technology, and a lack of comfort with NGVs
technology. Canada’s transportation sector could                                   based on past history.
benefit from expanding the use of lower-emission

1
  Natural resources Canada, Energy Efficiency Trends in Canada 1990 to 2007,
  april 2010.
2
  Natural resources Canada (2006), Canada’s Energy Outlook: Reference Case 2006.
3
  Natural resources Canada, Energy Efficiency Trends in Canada 1990 to 2007,
  april 2010.

                                                                                                 ExECutivE suMMaRy                      ix
NATURAL GAS USE IN THE CANADIAN TRANSPORTATION SECTOR - DEPLOYMENT ROADMAP - NATURAL GAS USE IN TRANSPORTATION ROUNDTABLE
was performed to assess, analyze, and rank potential
                                                        end-use applications in the medium- and heavy-duty
                                                        portion of the transportation sector, 2) the consulta-
                                                        tions that were undertaken with various end-users
                                                        that might adopt this technology, and 3) the signifi-
                                                        cant contributions made by the Roundtable member
                                                        organizations, which were fully engaged in the Road-
                                                        map development from the outset. The Roadmap’s
                                                        framework for assessing the true potential of NGV
                                                        adoption could also be used by those considering
                                                        other fuel or technology pathways.

                                                        Roadmap process
                                                        As an initial step in developing the Roadmap, working
                                                        groups assessed opportunities for new natural
                                                        gas markets in the on-road transportation sector
                                                        (including light-, medium-, and heavy-duty vehicles),
                                                        as well as marine and rail applications. In the near
                                                        term, medium- and heavy-duty vehicles were found to
                                                        offer the greatest opportunities for increased natural
                                                        gas use. The prospects for natural gas use in other
                                                        applications, including light-duty vehicles, marine
                                                        vessels, and locomotives, were also found to be prom-
                                                        ising. However, due to more substantial barriers,
                                                        which may include supply chain, technological, and
Natural Gas use in                                      market issues, these vehicle applications will likely
transportation Roundtable                               require a longer time frame to achieve widespread
To respond to these challenges, the Natural Gas Use     natural gas use. Because of this finding, the working
in Transportation Roundtable — led by the Deputy        groups’ subsequent work — which included conduct-
Minister of Natural Resources Canada — was formed       ing business case modelling, developing an education
in March 2010 to identify the optimal use of natural    and outreach strategy, and examining research and
gas in Canada’s transportation sector. The Roundtable   development (R&D) requirements — focused primar-
consisted of federal and provincial officials; indus-   ily on medium- and heavy-duty applications.
try representatives, such as natural gas producers,
transporters, distributors, vehicle makers, equipment   The resulting Roadmap aims to:
manufacturers, and end-users; and representatives       „„Address fundamental knowledge gaps regarding
from environmental non-governmental organizations         stakeholder interest, capacity, and economic and
and academia.                                             environmental impacts;
                                                        „„Inform public and private sector decision-makers;
The Natural Gas Use in the Canadian Transportation      „„Assist stakeholders in determining long-term
Sector Deployment Roadmap is the result of the            investment requirements; and
Roundtable’s work. This Deployment Roadmap              „„Outline key steps for implementation by defin-
is innovative in nature and distinguishes itself          ing future government programming needs and
from technology roadmaps in three fundamental             industry’s role.
ways: 1) the detailed business modelling work that

x           NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
Recommendations                                             Rationale
The following set of recommendations was devel-             Temporary fiscal measures would help de-risk adop-
oped in consultation with stakeholders representing         tion and lower economic barriers to market entry.
all Roadmap working groups as well as Roundtable            End-users perceive early adoption as risky and, in
members. These recommendations reflect findings             particular, they attach uncertainty and risk to 1) the
related to business modelling work; capacity-building       residual value of an NGV after the initial ownership
needs; and research, development, and demonstra-            period (e.g. four to five years for highway tractors),
tion (RD&D) requirements. Recommendations have              2) the potential for ongoing fuel savings, and 3) the
been proposed in four key areas: 1) De-risking Invest-      lack of refuelling infrastructure relative to diesel fuel
ment and Early Adoption, 2) Addressing Information          infrastructure. Temporary fiscal measures would
Gaps, 3) Increasing Capacity to Sustain Markets, and        encourage early adoption of NGVs in larger quantities,
4) Ensuring Ongoing Competitiveness.                        which in turn would help the NGV industry achieve
                                                            the economies of scale required to reduce the cost of
De-risking investment and Early adoption                    vehicle systems. While there is a positive internal rate
1. Analysis has demonstrated that investment in             of return for several end-use applications, temporary
   medium- and heavy-duty NGVs can provide envi-            fiscal measures would also be necessary to overcome
   ronmental and over-vehicle-life economic benefits,       the barriers to adoption if they are determined to
   but the upfront capital cost vehicle premium             be the result of market failure within the medium-
   and the risks associated with operation costs            and heavy-duty portion of Canada’s transportation
   and achieving ongoing fuel savings are barriers          sector. While there are many precedents for market
   to adoption. Fiscal measures implemented on a            intervention by governments to assist in developing
   temporary basis could address these barriers and         scale and removing barriers to entry, over the longer
   de-risk decision-making for early fleet adopters.        term it will be important for natural gas as a trans-
2. To introduce natural gas into the new market             portation fuel to be able to compete on a level playing
   of over-the-road trucking, coordinated invest-           field with other fuels — based on its own merits.
   ments are needed to ensure that the development          This principle should be considered by policy-makers
   of key corridor infrastructure is consistent with        in terms of the design and duration of any policies
   projected demand, strategically located to sup-          moving forward.
   port end-users, and installed in a timely manner
   across jurisdictions.                                    addressing information Gaps
3. Existing industry players could provide access           5. An education and outreach strategy would be
   to private onsite refuelling stations. Fleets could         needed to target end-users as well as market
   further improve the business case for natural gas           influencers and other key stakeholders. This
   adoption by allowing other fleets to use these sta-         strategy should consist of both a “top-down” and a
   tions via cardlock and other arrangements. How-             “bottom-up” approach. A top-down approach would
   ever, there are implementation details (e.g. liability      include a central website for all target audiences
   issues) that would need to be addressed by the              with local content tailored to specific jurisdictions.
   parties involved.                                           A bottom-up approach would feature a local sup-
4. Demonstration of the use of natural gas is needed           port network for end-users and provide access to
   to address technical barriers, develop standards,           resources including workshops and case studies of
   and conduct feasibility studies and business cases.         local fleets.

                                                                           ExECutivE suMMaRy                       xi
Rationale                                                        „„Act as an umbrella organization for the local
End-users identified gaps in their knowledge and                   support network for end-users; and
awareness of NGVs as an option that could serve                  „„Serve as a forum for stakeholders to discuss
their needs. In addition, end-users with past experi-              issues pertinent to the natural gas community.
ence using natural gas had additional information
requirements related to recent NGV developments,              Rationale
particularly technological innovations. It would              To encourage NGV adoption, end-users need to be
provide momentum if governments and other players             supported during their purchasing decisions, and
were to provide essential information to enable mar-          adequate codes and standards need to be in place to
kets to function efficiently, especially since there is       ensure a successful technology rollout. Over the past
no single private sector actor that operates across the       decade, very little work has been done in Canada to
entire spectrum of the NGV value chain. Governments           update CNG codes and standards, while LNG codes
are regarded as unbiased providers of information             and standards require even more fundamental
in the vehicle and fuel market arenas, and this               development. As NGV technology becomes increas-
neutrality is important to end-users. Benefits of this        ingly available, fleets will require support, since this
measure include the development of a broader under-           technology features specific maintenance and safety
standing and increased awareness of the applicability         requirements that will necessitate training of opera-
of NGVs, which would facilitate adoption of these             tors and mechanics. An NGV implementation body
vehicles in greater numbers.                                  is recommended as a way to coordinate the work of
                                                              governments and stakeholders along the NGV value
I                                                             chain to ensure the successful deployment of this
6. A “safety codes and standards” working group               technology and mitigate the risks borne by end-users
   should be established to collaborate with existing         or by any individual player.
   Canadian Standards Association technical commit-
   tees to address gaps and issues in existing codes          Ensuring Ongoing Competitiveness
   and standards identified during the Roadmap pro-           9. The NGV industry funds R&D activities at present.
   cess. Separate committees for liquefied natural gas            Further investment by others, including govern-
   (LNG) and compressed natural gas (CNG) may need                ments, has the potential to enhance the competi-
   to be formed to review existing codes and revise or            tive position of the industry through targeted
   develop new codes and standards. An umbrella com-              R&D investment. Priorities for future R&D include
   mittee is needed to ensure that codes and standards            reducing or eliminating the cost differential
   for CNG, LNG, liquefied compressed natural gas, and            between natural gas and diesel vehicles over the
   biomethane are coordinated and comprehensive.                  long term and maximizing NGVs’ operational and
7. Appropriate training materials for stations, vehicle           environmental benefits.
   repairs, and NGV fleet operations, as well as for cylin-   10. Potential for natural gas use in other transporta-
   der inspection, need to be developed and delivered.            tion applications should continue to be explored.
8. An NGV implementation body — consisting of
   Roundtable members and other key stakeholders —            Rationale
   should be established to:                                  While NGV technology is already mainstream and
   „„Support the implementation of the Roadmap’s              commercially proven, support for NGV R&D is needed
      recommendations and assess progress against             to further reduce the incremental cost of NGV-related
      key milestones;                                         technologies. In addition, assistance is needed to sus-
   „„Provide recommendations to stakeholders                  tain market development through the expansion of
      regarding how the natural gas community                 the number of NGV offerings for end-users. NGV tech-
      could respond to future developments, such              nologies would also benefit from R&D investments to
      as changes in market conditions and techno-             reduce the incremental cost of these vehicles, which
      logical innovations;

xii          NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
Table 1 Natural Gas Use in transportation: roles and responsibilities

                                                    GoverNmeNts          NG producers,        iNfrastructure      eNd-users
                                                                         traNsporters,       aNd vehicle supply
                                                                        aNd distributors          stream

 de-risking Investment    Vehicle Premium               „                      „                                     „
 and early adoption
                          Corridor Infrastructure       „                      „                     „

                          return-to-base                                       „                     „               „
                          Infrastructure
                          demonstrations                „                                            „               „

 addressing               education and Outreach        „                      „                     „
 Information Gaps
 Increasing Capacity to   Codes and Standards           „                      „                     „
 Sustain Markets
                          training                      „                      „                     „

                          Implementation                „                      „                     „               „
                          Committee
 ensuring Ongoing         r&d                           „                                            „
 Competitiveness
                          Use of NG in Other            „                      „                     „               „
                          applications

would ensure ongoing competitiveness for innovative                     air contaminants have all contributed to renewed
low-emission Canadian technologies. By continuing                       interest in natural gas as a transportation fuel. Now
to explore the potential for natural gas use in other                   that market conditions are more favourable, Canada’s
transportation applications, the natural gas commu-                     natural gas community is well positioned to take a
nity will help expand the benefits of natural gas as a                  significant leap forward in deploying these vehicles
fuel and potentially leverage infrastructure and R&D                    in greater numbers. While natural gas is not the only
investments made for the medium- and heavy-duty                         solution for reducing GHG emissions produced by
vehicle market.                                                         medium- and heavy-duty vehicles, it provides a par-
                                                                        ticularly good set of benefits for return-to-base and
Roles and Responsibilities                                              corridor fleets. As a result of past research assistance
The stakeholders in Table 1 were identified as parties                  from governments, several Canadian companies are
who could take on roles and responsibilities as they                    now technology leaders in the areas of natural gas
relate to moving the recommendations of this Road-                      vehicles and fuelling infrastructure. There is also a
map forward. For many of these activities, numerous                     sound base of codes and standards that the natural
stakeholders could play a role; however, the table                      gas community can build upon. But perhaps the most
aims to provide a general overview of the roles that                    important advantage for Canada’s natural gas com-
key stakeholders could play during the early stages of                  munity is the new collaborative environment that has
NGV market development.                                                 developed as a result of the Roadmap process. Such
                                                                        collaboration, which was essential during the Road-
Moving Forward                                                          map’s development, will again be critical as Canada’s
For governments and industry alike, the changing                        natural gas community turns its focus to implement-
supply story for natural gas, projected high oil prices,                ing the recommendations set out in this report.
and the need to reduce GHG emissions and criteria

                                                                                           ExECutivE suMMaRy                  xiii
b a C K G R O u N D

xiv      NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
b a C K G R O u N D

Chapter 1

introduction
Natural Gas: an Energy “Game Changer”                    „„End-user needs;
Not long ago, energy analysts projected that natu-       „„Codes and standards; and
ral gas production in North America would decline        „„Market transformation and policy analysis.
steadily for the foreseeable future. However, recent
advances in drilling technology have enabled cost-       Co-leaders from Natural Resources Canada and private
effective extraction of natural gas from unconven-       sector organizations were assigned to each working
tional reservoirs, such as shale formations, which are   group, which consisted of staff from the Round-
in abundant supply. In response to this development,     table member organizations. These working groups
North American energy market analysts now describe       conducted research and analysis in their respective
natural gas as a potential energy game changer, and      subject areas, and met periodically by teleconference
governments and industry are exploring new and           to assess progress and determine next steps.
expanded opportunities for this resource.
                                                         As an initial step in developing the Roadmap, work-
Roadmap approach                                         ing groups assessed opportunities for new natural
In response to this opportunity, a Roundtable —          gas markets in the on-road transportation sector
led by the Deputy Minister of Natural Resources          (including light-, medium-, and heavy-duty vehicles),
Canada — was formed in March 2010. It consisted          as well as marine and rail applications. During its
of senior officials in federal and provincial govern-    second meeting, which took place in June 2010, the
ments, end-users, executives from industry (including    Roundtable determined that medium- and heavy-
gas producers, transporters, distributors, and vehicle   duty vehicles offered the greatest opportunities for
and equipment manufacturers) and representatives         increased natural gas use in this sector in the near
from environmental non-governmental organizations        term. The prospects for natural gas use in other appli-
and academia. During the Roundtable’s inaugural          cations, including light-duty vehicles, marine vessels,
meeting, working groups were formed to focus on the      and locomotives, were also found to be promising.
following issues:                                        However, due to more substantial supply chain and
„„Natural gas fundamentals;                              technological barriers, these vehicle applications were
„„Vehicle readiness and R&D;                             identified as likely requiring a longer time frame to
„„Infrastructure readiness and R&D;                      achieve widespread natural gas use in Canada.

                                                               baCKGROuND | ChaptER 1                         1
The Roadmap’s purpose is to identify the optimal
use of natural gas in Canada’s transportation sector.

As a result of this decision, the working groups’       groups from March to October 2010. The Roadmap’s
subsequent analytical work primarily dealt with         purpose is to identify the optimal use of natural gas
medium- and heavy-duty applications. During the         in Canada’s transportation sector. It also aims to:
analytical stage of the Roadmap’s development, work     „„Address fundamental knowledge gaps regarding
focused on three key areas:                                stakeholder interest, capacity, and economic and
„„Conducting business case modelling to determine          environmental impacts;
   the optimal use of natural gas in specific medium-   „„Inform public and private sector decision-makers;
   and heavy-duty vehicle applications;                 „„Assist in determining long-term investment
„„Developing an education and outreach strategy to         requirements by stakeholders; and
   ensure that end-users and other key stakeholders     „„Outline key steps for implementation and define
   have the information they need to facilitate NGV        future government programming needs and
   deployment; and                                         industry’s role.
„„Identifying R&D requirements to ensure that the
   NGV industry becomes self-sustaining over the        This report is unique in nature and distinguishes
   long term.                                           itself from technology roadmaps in three fundamen-
                                                        tal ways: 1) the detailed business modelling work that
During its final meeting in September 2010, the         was performed to assess, analyze, and rank potential
Roundtable reviewed drafts of the Roadmap report        end-use vehicle applications, 2) the consultations
and recommendations and provided a final set of         that were undertaken to identify opportunities and
revisions. Once these revisions were complete, Round-   challenges within the end-user community, and
table members provided their final concurrence to       3) the significant contributions made by the Round-
the report.                                             table member organizations, which were fully engaged
                                                        in the Roadmap’s development from the outset.
the Final product                                       Because of its emphasis in these areas, the Roadmap’s
The Natural Gas Use in the Canadian Transportation      framework could potentially be used by others who
Sector Deployment Roadmap is the culmination of the     are assessing other fuel and technology pathways.
work led by Roundtable members and the working

2           NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
b a C K G R O u N D

Chapter 2

Drivers of interest and
Market Opportunities
Participants involved in the Roadmap’s development
                                                                               1200
focused on addressing two fundamental questions
                                                                               1000
pertaining to scope. The first question was, “Recog-

                                                                Consumption (PJ)
                                                                                                                                      Industrial
nizing that natural gas use could be expanded in                                   800
                                                                                                                                      Residential
several key sectors, why should governments and                                    600
                                                                                                                                      Commercial
industry consider natural gas in the transportation                                400                                                Electricity
sector at this time?” In other words, what factors                                 200
                                                                                                                                   Transportation
are driving interest among stakeholders to consider                                 0
natural gas use specifically in the transportation
                                                                                     90

                                                                                             95

                                                                                                   00

                                                                                                                05

                                                                                                                             10
                                                                                    19

                                                                                             19

                                                                                                  20

                                                                                                               20

                                                                                                                            20
sector? The second question was, “Within the trans-                                                Year
portation sector, which vehicle applications have the             Source: Natural Resources Canada (2010), “Energy Use Data Handbook Tables (Canada).”
                                                                  Accessed February 2010.
greatest potential for natural gas use?” This chapter
provides the Roundtable’s responses to these questions.
                                                            Figure 1 Natural Gas Consumption in Canada by Sector (1990–2007)

Why should Governments and industry
Consider Natural Gas use in the                             There are a number of benefits that can be derived
transportation sector?                                      from expanded natural gas use in the transportation
Canada’s abundant natural gas resources can be used         sector. First, it will diversify the sector’s poten-
in any of the nation’s major economic sectors, includ-      tial energy sources. Unlike all other sectors of the
ing commercial, residential, industrial, electricity, and   Canadian economy, transportation relies on a single
transportation. As Figure 1 indicates, natural gas use      energy source (crude oil-based fuels) to meet nearly all
in the various sectors of the economy increased from        of its energy demands. In 2007, crude oil-based fuels
1990 to 2007. The transportation sector is unique           supplied 99 percent of transportation energy demands,
in that it currently uses significantly less natural        compared with propane (0.5 percent), electricity
gas relative to the other sectors. Even if demand for       (0.1 percent), and natural gas (0.1 percent).1 And while
natural gas use in the transportation sector increased      Canada is a net exporter of crude oil, more than half
significantly over the coming decade, the effect on         of the oil processed in Canadian refineries is imported
natural gas prices would likely be minimal.                 from Europe, the Organization of Petroleum Exporting
                                                            Countries (OPEC), and the northeastern United States.2

                                                            1
                                                                Natural resources Canada, “National energy Use database,” http://www.oee.nrcan.
                                                                gc.ca/corporate/statistics/neud/dpa/trends_tran_ca.cfm.
                                                            2
                                                                ecoressources Consultants, Cost-Benefit Analysis of the Proposed Regulations to
                                                                Require Renewable Fuels Content in Canadian Fuels – the 2% Requirement. a report
                                                                prepared for environment Canada. Page 11.

                                                                                         baCKGROuND | ChaptER 2                                          3
Table 1 drivers for Key Stakeholders

    stakeholder                         drivers

    Governments                         „„enhance energy diversification
                                        „„develop clean energy solutions
                                        „„Meet GhG reduction targets / build a low-carbon economy / encourage growth of green industries
                                        „„Foster strong markets for Canada’s energy resources
                                        „„Support economic recovery and sustainable growth
                                        „„Support the economic competitiveness of Canadian industries and technology

    Fuel Supply Stream                  „„take the opportunity to provide abundant, Canadian, low-cost natural gas resources
    (Natural Gas Producers)             „„Stimulate demand and expand markets
                                        „„retain and attract investment in Canada
                                        „„Strategically invest in anticipation of climate change regulations

    Fuel Supply Stream                  „„Use the significant infrastructure already in place
    (Natural Gas transmission           „„Increase throughput to reduce tolls and improve competitiveness
    and distribution)                   „„diversify markets
                                        „„build demand beyond traditional end-use markets

    Vehicle and equipment Suppliers     „„Supply consumers with lower-carbon fuel options
                                        „„Position Canadian companies to compete more effectively when heavy-duty vehicle carbon regulations
                                          are implemented
                                        „„build on the competitiveness of Canada’s world-leading industry:
                                          „„develop a strong technology and manufacturing base nationally
                                        „„encourage wider use of technologies to achieve economies of scale in production
                                        „„Provide local economic benefits through jobs and accessing local supplier networks

    E                                   „„Invest strategically in expectation of heavy-duty GhG emissions regulations
                                        „„demonstrate commitment to customers/shareholders:
                                          „„Significant GhG reduction benefits associated with renewable natural gas
                                          „„ability to measure and quantify GhG reductions
                                          „„Opportunity to reduce noise in urban settings
                                        „„take advantage of expectations that natural gas will remain competitively priced:
                                          „„Natural gas use may reduce fuel price volatility risks
                                        „„take into account the increasing cost and complexity of 2010 diesel engine emission control technology

Second, natural gas can provide important benefits                                   on an energy equivalent basis. Furthermore, recent
as a low-carbon transportation fuel. In 2007, Canada’s                               growth in the Canadian natural gas supply lends con-
transportation sector accounted for approximately                                    fidence that this discount will continue for the fore-
29 percent of total energy demand, making it the                                     seeable future. This benefit is potentially critical for
second-largest energy consumer in the nation.3 As                                    operators of medium- and heavy-duty vehicle fleets,
a result of such significant energy demand, this                                     who may be able to use natural gas to substantially
sector also accounted for 36 percent of Canada’s                                     lower their fuel costs on a per kilometre basis. With
GHG emissions, making it the second-largest source                                   the growing availability of factory-built natural gas
of emissions in the country.4 Moreover, total energy                                 medium- and heavy-duty vehicles, there is an oppor-
demand in the transportation sector is expected                                      tunity to ensure that lower-emission NGVs are seen as
to grow by 31 percent between 2004 and 2020.5                                        a viable option for the normal replacement of vehicle
The major source of energy use and emissions is                                      fleets over time. In addition to these benefits, there
on-road vehicles.                                                                    are also numerous other factors driving interest in
                                                                                     the use of natural gas in the transportation sector.
Third, natural gas is a cost-effective fuel that has his-                            These drivers — which can be unique to specific
torically traded at a discount to crude oil-based fuels                              stakeholders — are provided in Table 1.

3
  Natural resources Canada, Energy Efficiency Trends in Canada 1990 to 2007,
  april 2010.
4
  Natural resources Canada (2010), Canada’s Secondary Energy Use by Sector,
  End-Use and Sub-Sector.
5
  Natural resources Canada (2006), Canada’s Energy Outlook: Reference Case 2006.

4                  NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
Within the transportation sector, which                   from medium- and heavy-duty vehicles. Figure 2
vehicle applications have the greatest                    compares diesel fuel GHG emissions with emissions
potential for natural gas use?                            produced by biodiesel (5 percent blend), compressed
With interest in potentially increasing natural gas use   natural gas (CNG), and liquefied natural gas (LNG).
in the transportation sector identified, the Roundtable   For each fuel, the figure includes upstream emissions
turned its focus to determining the specific vehicle      (i.e. emissions produced during resource recovery,
applications that have the greatest potential for         refining, and shipping) and vehicle operation emis-
increased natural gas use in the near term. To address    sions (i.e. emissions produced at the tailpipe). As the
this issue, the Roundtable assessed the potential for     figure indicates, natural gas produces between 21 to
increased natural gas use in various vehicle segments,    30 percent fewer GHG emissions on a well-to-wheels
including light-, medium-, and heavy-duty vehicles, as    lifecycle basis compared with diesel.
well as marine vessels and locomotives. The following
criteria were used to evaluate these segments: tech-      Due to the low carbon content of natural gas relative
nology availability, market potential, environmental      to gasoline and diesel, the production of NGVs could
benefits, energy use, and economic impact. In the         help truck and bus manufacturers meet yet-to-be-
near term, medium and heavy-duty vehicles were            developed fleet average GHG standards. The Govern-
found to have the greatest potential for widespread       ment of Canada recently announced its intention to
deployment as a result of the following factors:          implement GHG fleet average standards, which will
„„The availability of mature, certified vehicle engine    come into effect in 2014; however, the structure of
   and storage technologies;                              the medium- and heavy-duty standards is unknown
„„The growing energy demand for which these               at this time.
   vehicles, particularly heavy-duty vehicles, account;
„„The potential for significant fuel savings and a        In addition to the incoming GHG vehicle standards,
   good rate of return for fleet owners; and              there are other environmental regulations for which
„„Significant market potential given the focus on         natural gas could receive favourable treatment. Natural
   return-to-base and corridor fleets.                    gas use in vehicle fleets could provide an important

In addition, natural gas may have a role to play in the
light-duty marketplace in the medium term, particu-
                                                                              1600                  4% Reduction
larly for fleet applications used by taxi companies,                                               Relative to Diesel
                                                                              1400
municipalities, construction businesses, and utilities.                                                                  21% Reduction
                                                                                                                        Relative to Diesel
For large fleets that already have a private onsite CNG                       1200                                                            30% Reduction
                                                           Grams of CO2e/km

                                                                                                                                             Relative to Diesel
station, there is an opportunity to further improve                           1000
the economics of infrastructure investment for the                             800
fleet owners by extending natural gas use to their                             600
light-duty vehicles. Similar synergies may also exist
                                                                               400
for corridor as well as marine and rail applications.
                                                                               200
See Appendix A for additional details regarding the
                                                                                 0
results of the scoping analysis.                                                       Diesel             B5                  CNG                   LNG

                                                                                     Vehicle Operation       Upstream
Options for Reducing GhG Emissions from
                                                             Source: GHGenius version 3.16b (2010)
Medium- and heavy-Duty vehicles
In addition to these benefits, Roundtable members
                                                          Figure 2 alternative Fuel Options to reduce GhG emissions from
emphasized the important role that natural gas can        heavy-duty trucks
play in helping various entities comply with environ-
mental regulations that aim to reduce GHG emissions

                                                                                 baCKGROuND | ChaptER 2                                                           5
Why GhG Emissions are lower from Natural Gas than Diesel
       as Figure 2 indicates, the upstream extraction and processing of natural gas, as well as combustion of it in a vehicle
       (as either CNG or lNG), produces fewer GhG emissions compared with diesel. With regard to upstream emissions,
       natural gas is typically processed only to remove impurities, a process that is less energy-intensive than the refining
       that is necessary to produce diesel.
       Natural gas also produces fewer vehicle operation emissions than diesel, for two reasons. First, natural gas con-
       sists primarily of methane, which has the lowest carbon content of any fossil fuel. by comparison, diesel contains
       long chain hydrocarbons and a high level of carbon-content aromatics. second, natural gas also has a higher energy
       content by mass than diesel. as a result of these two factors, natural gas produces fewer vehicle operation emis-
       sions than diesel: 13.68 grams of carbon per megajoule (g-C/MJ) and 18.79 g-C/MJ respectively, although there
       may be engine efficiency differences compared with diesel, depending on the type of natural gas engine technology.
       Source: GhGenius version 3.16b (2010)

contribution to reaching climate change policy goals                                        Conclusion
in Canada at a reasonable cost. For example, if one out                                     Within the transportation sector, medium- and heavy-
of every 10 new medium and heavy-duty vehicles sold                                         duty vehicles were found to have the greatest poten-
in Canada over the next 10 years were natural gas-                                          tial for increased natural gas use in the near term.
powered (36,000 vehicles), carbon emissions could be                                        There a number of reasons why the transportation
reduced by an estimated 1.99 megatonnes annually                                            sector would benefit from expanded natural gas use,
by 2020.6 Similarly, fuel providers are already prepar-                                     such as:
ing to meet new regulations for low-carbon fuels in                                         „„Diversifying energy use and responding to
British Columbia, as well as forthcoming regulations                                           increasing energy demand;
being developed in some other provinces. The inclu-                                         „„Reducing carbon emissions;
sion of natural gas for transportation in the mix of                                        „„Introducing a cost-effective Canadian-sourced fuel
fuels sold by fuel suppliers could help them meet                                              that has historically traded at a discount to crude
standards where the regulations permit.                                                        oil-based fuels on an energy equivalent basis into
                                                                                               a new market (this issue is discussed in detail in
It is worth noting that in addition to using alterna-                                          Chapter 4); and
tive fuels such as natural gas, further GHG emission                                        „„Providing an alternative compliance option as carbon-
reductions can be achieved through the use of supple-                                          related regulations enter the transportation sector.
mental options that improve the fuel efficiency of
end-use applications, such as aerodynamic devices                                           In addition to these benefits, the list of drivers leading
and design, fuel-efficient tires, and driver training.                                      stakeholders to expand natural gas use in the trans-
The U.S. Environmental Protection Agency has esti-                                          portation sector is compelling. Individual stakeholders
mated the benefits of some of these options. For exam-                                      can realize benefits, but only if the other stakehold-
ple, aerodynamic devices such as trailer end fairings                                       ers agree to participate in developing the market. The
can provide an estimated 5 percent or greater reduc-                                        likely extent and strength of such cooperation will
tion in fuel use. Low rolling resistance tires can lead to                                  depend on the needed investments, perceived risks
fuel savings of approximately 3 percent or greater. The                                     and economic returns — issues that are explored in
application of these technologies, coupled with driver                                      Chapter 5. The next chapter reviews the current state
training, can lead to additional fuel-saving benefits.7                                     of natural gas in transportation technology and policy
                                                                                            in Canada, and provides valuable contextual informa-
                                                                                            tion that will lay the foundation for the Roadmap’s
6
    Calculated value based on GhGenius (version 3.16b) and historical vehicle sales data    subsequent analysis and recommendations.
    from the Canadian Vehicle Manufacturers association.
7
    U.S. environmental Protection agency (2010), Verified Technologies. available online:
    http://epa.gov/smartway/transport/what-smartway/verified-technologies.htm.

6                      NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
b a C K G R O u N D

Chapter 3

the state of Natural Gas use
in transportation
This chapter provides an overview of the current
                                                                                                  Asia-Pacific
state of natural gas use in the transportation sector
                                                                                               Latin America
from a global perspective — then more specifically
                                                                                                       Africa
from a Canadian and U.S. market perspective — with
                                                                                                       Europe
emphasis on existing NGV policies and programs. The
                                                                                               North America
latter part of the chapter describes the current state
                                                                                                        Total
of natural gas vehicle and infrastructure technology,
                                                                                                -10%         0%        10%        20%        30%        40%        50%        60%
as well as codes and standards.
                                                                                            Source: International Association for Natural Gas Vehicles (2010), “NGV by Region.”
Global Market for NGvs                                                                      Accessed June 2010.

As of December 2009, there were more than 11 million
                                                                                       Figure 1 average NGV Growth by region Since 2000
natural gas vehicles in operation globally.1 The use
of natural gas as a road transport fuel currently
accounts for 1 percent of total vehicle fuel con-                                      population of light-duty NGVs grew to over 35,000
sumption worldwide. The average growth rate in                                         by the early 1990s. This assistance resulted in a sig-
the number of NGVs between 2000 and 2009 was                                           nificant adoption of natural gas transit buses as well.
28.7 percent, with Asia-Pacific ranking highest at                                     The NGV market started to decline after 1995, even-
+50.9 percent and North America ranking lowest at                                      tually reaching today’s vehicle population of about
-0.1 percent (see Figure 1). This trend is expected to                                 12,000.2 This figure includes 150 urban transit buses,
continue at an average rate of 3.7 percent per year                                    45 school buses, 9,450 light-duty cars and trucks,
to 2030, with most of the growth coming from non-                                      and 2,400 forklifts and ice-resurfacers. The total fuel
OECD countries that already account for most natural                                   use in all NGV markets in Canada was 1.9 petajoules
gas use for on-road transportation. See Appendix B                                     (PJs) in 2007 (or 54.6 million litres of gasoline litres
for a cross-jurisdictional analysis of NGV policies                                    equivalent), down from 2.6 PJs in 1997. Public CNG
and programs.                                                                          refuelling stations have declined in quantity from
                                                                                       134 in 1997 to 72 today. There are 22 in British
Canadian Context                                                                       Columbia, 12 in Alberta, 10 in Saskatchewan, 27 in
With assistance from federal and provincial research                                   Ontario, and 1 in Québec. There are only 12 private
programs, demonstration projects, and NGV market                                       fleet stations.3
deployment programs during the 1980s and 1990s, the

                                                                                       2
                                                                                           International association for Natural Gas Vehicles (2010), “Natural Gas
                                                                                           Vehicles Statistics,” http://www.iangv.org/tools-resources/statistics.html.
1
    International association for Natural Gas Vehicles (2010), “Natural Gas Vehicles   3
                                                                                           Marbek (March 2010), “Study of Opportunities for Natural Gas in the
    Statistics,” http://www.iangv.org/tools-resources/statistics.html.                     transportation Sector.”

                                                                                                     baCKGROuND | ChaptER 3                                                         7
Current support in Canada
                                                          There is little remaining federal support for natural gas
                                                          in transportation, apart from the continuing exemp-
                                                          tion from the excise tax on fuels (10¢/litre on gasoline
                                                          and 4¢/litre on diesel). However, as the fuel tax chart
                                                          (Figure 7) in Chapter 4 indicates, the combination of
                                                          the exemptions from excise and provincial fuel taxes for
                                                          natural gas constitutes a substantial price advantage.

                                                          Québec’s 2010 budget increased the capital cost
                                                          allowance rate for freight hauling trucks and tractors,
                                                          with additional deductions for LNG-fuelled trucks.
                                                          British Columbia’s Clean Energy Act, introduced in
                                                          May 2010, includes a provision that could be used
                                                          to support NGVs. Within the private sector, natural
                                                          gas distribution utilities continue to provide a range
                                                          of services and, in some cases, financial support that
                                                          is recovered through gas sales to fleet end-users.
                                                          However, these utilities are now limited in terms of
                                                          the activities they can undertake due to the restric-
                                                          tions within the regulated business model under
                                                          which they operate.

                                                          U
                                                          Similar to Canada, the United States has implemented
                                                          various NGV initiatives and programs since 1980 but
                                                          has had limited success in sustaining the market.
Several factors have led to the decline of the Canadian   There were 105,000 NGVs in operation in 2000; this
NGV market since the 1990s:                               figure peaked at 121,000 in 2004, and decreased to
„„The price advantage of natural gas over gasoline        110,000 in 2009.4 At the federal level, vehicle tax credit
  and diesel in Canada eroded after world oil             and fuel incentive policies have provided assistance
  prices collapsed;                                       over the past five years, and the NGV industry is cur-
„„Vehicle costs increased as vehicle modifiers            rently working to secure extensions of these measures.
  added technology to meet tighter vehicle exhaust        In California, a lead state in NGV deployment, LNG and
  emission requirements;                                  CNG use in heavy-duty trucks and buses has grown in
„„R&D support to NGVs diminished in the 1990s;            response to the state’s aggressive clean air policies.
„„Public refuelling station use declined as the
  number of new NGVs decreased, which led to a            Current support in the united states
  deterioration of refuelling station revenues and        The U.S. federal government and some state govern-
  station closings;                                       ments continue to support NGVs through vehicle and
„„There was a limited choice of factory-made NGV          station incentives and tax credits. The need to reduce
  models available; and                                   dependency on oil imports is an important policy
„„The restrictive regulation of the natural gas distri-   driver in the United States. The recent expansion in
  bution industry limited non-core business activities,   domestic natural gas production is one of the reasons
  including NGV business development activities,          that Congress is currently considering renewing and
  following industry deregulation.                        strengthening NGV incentives.

                                                          4
                                                              International association for Natural Gas Vehicles (2010), “Natural Gas Vehicles
                                                              Statistics,” http://www.iangv.org/tools-resources/statistics.html.

8           NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
At the federal level, several key incentives have either   peak-shaving plants operated by natural gas utilities.
recently expired or are about to expire. These include     It appears that these facilities may have some excess
an excise tax credit for CNG and LNG; tax credits          LNG capacity that can be diverted to transportation
for the purchase of a new, dedicated, repowered, or        markets; two of the utilities5 are in the process of
converted alternative fuel vehicle; and an income tax      securing approvals from regulators to allow this use.
credit for refuelling equipment. Additional programs       If the demand for LNG in specific vehicle applications
at the federal level include:                              develops as envisioned in this Roadmap, this fuel
„„The Department of Energy’s Clean Cities Program, a       could be manufactured from pipeline gas or sourced
   government-industry partnership that announced          from LNG import terminals such as Canaport in
   23 cost-share grants (10 related to natural gas),       Saint John, New Brunswick. It could then be trans-
   which totalled $13.6 million in 2009.                   ported in LNG tanker trucks, rail cars or marine
„„The National Renewable Energy Laboratory’s               vessels to be distributed to refuelling facilities. LNG
   April 2010 request for proposals regarding the          can also be vaporized (gasified) and pressurized at
   development of natural gas engines and vehicles.        a refuelling facility to provide CNG.
   The solicitation includes the potential for
   $14.5 million in funding for engine develop-            Natural gas, for use as a transportation fuel in either
   ment, chassis integration, and demonstration            CNG or LNG form, is typically sold to the end-user in
   of on-road products.                                    one of three ways:

infrastructure technology Readiness                        „„“Do-It-Yourself”   — End-users can purchase
Canada has one of the most extensive natural gas             natural gas from a utility or gas marketer (deliv-
pipeline distribution networks in the world, delivering      ered by a utility) and source the fuelling station
this resource from Western Canada and the East               equipment separately. The end-users invest their
Coast offshore to markets in the United States and           own capital to install a refuelling station and
across Canada. The expansion of this pipeline net-           access a service provider to maintain the station
work over the past 30 years has led to increased use         equipment on a contract or fee basis. However,
of natural gas in North America. The reach of the            the customers are expected to develop specifica-
network, the attractive price of natural gas, and its        tions, build, and operate the CNG or LNG fuelling
emission reduction benefits provide an opportunity           station equipment themselves.
for the transportation sector to increase its use of       „„“Utility Package” — Gas utility companies deliver
this fuel.                                                   and sell natural gas and may also provide fuel-
                                                             ling infrastructure. Under this model, normal
In some major transportation corridors, natural gas          distribution services can be expanded to make
trunk pipelines coincide with major highways, rail           the product usable as a vehicle fuel. The utility
lines and even waterways. Natural gas refuelling sta-        provides compression/dispensing systems for
tions can be located along these corridors to serve the      CNG or storage/dispensing systems for LNG. It
trucking industry, and in some cases could use high-         may also provide support in developing specifica-
pressure pipeline gas to reduce the cost of providing        tions or building/operating the system in return
CNG. In urban areas such as Toronto and Vancouver,           for natural gas at special rates.
there are already approximately 50 CNG public stations     „„“Third-Party Service Provider” — Companies such
serving light- and medium-duty vehicles, as well as a        as Clean Energy build, operate, and maintain end-
smaller number of private fleet refuelling facilities.       user fuelling stations and facilitate the purchase
                                                             of natural gas on a long-term contract basis.
Currently there are no fuelling facilities that provide
LNG to vehicles on a regular basis. LNG is avail-
able at three locations in Canada where there are
                                                           5
                                                               terasen Gas has obtained approval to sell LNG into the transportation market from its
                                                               plant in the port area of Vancouver. Gaz Métro is in the process of obtaining similar
                                                               approvals for its Montreal peak-shaving LNG plant. a third peak-shaving LNG facility
                                                               in Northern Ontario is owned by Union Gas. If, in the future, LNG plants are built to
                                                               export natural gas to overseas markets, LNG could also be sourced from those plants.

                                                                        baCKGROuND | ChaptER 3                                                     9
Several Canadian companies are suppliers of natural
                                                            the natural gas vehicle industry in Canada includes
gas fuel delivery, compression, storage, and dispens-
                                                            a number of companies whose natural gas vehicle-
ing equipment.
                                                            and station-related products and services are
                                                            exported to NGv markets around the world.
vehicle technology Readiness                                these include:
There are two types of NGVs available to end-users:
                                                            „ alternative Fuel systems (alternative fuel
1) retrofitted vehicles (also called conversions),
                                                              automotive components)
and 2) those developed specifically by original equip-
                                                            „ Cummins Westport (CNG/lNG engines)
ment manufacturers (OEMs), and delivered to cus-
                                                            „ Dynetek industries (lightweight CNG storage
tomers as factory-built vehicles. Aftermarket vehicle
                                                              vessels)
conversions fall under provincial jurisdiction in
                                                            „ ECO Fuel systems (CNG vehicle conversion
Canada. Industry must take care to ensure that only
                                                              systems)
high-quality and low-polluting vehicle conversion
                                                            „ Enviromech industries (modular vehicle fuel
technologies are offered to the market. OEM vehicles
                                                              storage systems)
must comply with Transport Canada regulations.
                                                            „ Fti international Group (CNG dispensers
                                                              and stations)
Dedicated NGVs are designed to run only on natural
                                                            „ iMW industries (oil-free CNG compressors,
gas, while bi-fuel NGVs have two separate fuelling
                                                              dispensers and stations)
systems that enable the vehicle to use either natural
                                                            „ Kraus Global (CNG dispensers)
gas or a conventional fuel (gasoline or diesel), but
                                                            „ Powertech Labs (cylinder testing and certification)
not both fuels at the same time. In general, dedicated
                                                            „ saskatchewan Research Council (neural control
NGVs demonstrate better performance and have lower
                                                              and dual-fuel technologies)
emissions than bi-fuel vehicles because their engines
                                                            „ viridis technologies (CNG dispensers and
are optimized to run on natural gas. In addition, the
                                                              RFiD systems)
vehicle does not have to carry two types of fuel, thus
                                                            „ Westport innovations (lNG engine systems)
reducing weight and allowing increased cargo capacity.
                                                            „ xebec adsorption (natural gas dryers and biogas
                                                              upgrading equipment)
There are two engine technologies that can be used to
power natural gas vehicles: spark-ignited (SI) engines
use the same combustion cycle as gasoline engines,
while compression ignition (CI) engines are based         Medium- and heavy-duty natural gas engines are
on the diesel cycle. While CI engines tend to have a      available as options from an estimated 15 North
higher overall efficiency than SI engines, their higher   American truck and transit bus manufacturers at an
acquisition costs tend to make them more suited for       incremental cost of $35,000 to upwards of $60,000.
large fuel consumption applications.                      However, there are currently a limited number of
                                                          models available to end-users, which include:
For cars and light-duty trucks, there are no factory-     „„SI engines that are fuelled purely by natural gas
produced (OEM) products available in Canada,                 and can serve the medium- and heavy-duty engine
although GM is now offering two cargo vans with              market; and
dedicated natural gas fuel systems installed by a         „„Higher-horsepower heavy-duty engines that use
third-party converter. Ford has announced that it            dual-fuel injectors to initiate combustion with a
will make at least one natural gas “prepped” engine          small amount of diesel fuel, followed by the main
available to upfitters in the near future. A number of       injection of natural gas — these engines typically
small- and medium-capacity vehicle upfitters serve           use 95 percent or more natural gas.
the U.S. market by converting mostly new gasoline
light-duty vehicles to natural gas at an incremental      To maximize driving range for heavy-duty trucks, the
price in the range of $12,000 to $15,000.                 preferred way to store natural gas onboard is in its
                                                          denser liquid form (LNG) in cryogenic stainless steel

10          NatuRal Gas usE iN thE CaNaDiaN tRaNspORtatiON sECtOR
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